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Two bills recently introduced in the Michigan Senate would establish an office of Medicaid fraud in the state departments of Human Services and Community Health.

State Sen. Roger Kahn, a Republican from Saginaw Township, is the primary sponsor of the bills, SB 598 and SB 599, which were introduced in late August and are now in the Senate Appropriations Committee.

Kahn said the goal of his legislation is to stop fraud and the misuse of taxpayers’ dollars. “I fully support Medicaid. As a doctor, I know that people across the state depend on the health benefits they receive through Medicaid,” he said.

“That is why I want to help ensure that no one is scamming the system. We need to do everything we can to make sure that those who really need these benefits are receiving them,” he added.

SB 598 would create the office of Medicaid Inspector General, which would have the authority to investigate the administration and operation of the state’s Medicaid system. The inspector general also would have the power to review and approve the system’s contracts, policies and procedures.

SB 599 amends the state’s Social Welfare Act of 1939 and makes the Medicaid Inspector General an autonomous entity. It would lead and be responsible for managing and directing the state’s efforts to control fraud and abuse. The inspector general would have a wide array of powers and duties, including assisting the Michigan Attorney General’s investigative division and subpoenaing witnesses and taking testimony in suspected cases of fraud.

The Michigan Attorney General’s office created a Medicaid Fraud Control Unit in 1978, which became the Health Care Fraud Division in the AG’s office in 1986. It has the jurisdiction to seek civil recovery of Medicaid dollars that were fraudulently obtained.

Since its inception, the HCFD has obtained $7.4 million in criminal restitution orders, $11 million in civil judgments and $3.2 million in settlement agreements, for a total of $21.6 million. The AG office also said the HCFD has collected $1.1 million from providers to cover investigation and prosecution costs.

Medicaid isn’t the only public insurance program that is receiving fraudulent billings from the state’s medical industry.

According to Stop Medicare Fraud, a program jointly operated by the U.S. Department of Health and Human Services and the U.S. Department of Justice, investigations have led to charges and convictions in nine separate cases involving 27 individuals in Michigan from March through early September of this year. All who were charged or convicted this year were in the Detroit area and the fraudulent billings to Medicare totaled at least $181.5 million over roughly a six-month period.

The biggest incident so far this year occurred Sept. 1 and involved the arrest of 18 individuals in the psychotherapy and home health care fields for allegedly billing Medicare $28 million for services that were either medically unnecessary or never provided.

“Today we have charged physicians, nurses, clinic owners and other medical professionals for submitting millions of dollars in false claims to Medicare. According to court documents, these defendants paid kickbacks to beneficiaries and others, and falsified medical documents in order to deceive the Medicare program,” said Assistant Attorney General Lanny Breuer, of the criminal division, in a statement.

“Health care providers should be aware that the days of stealing from Medicare with impunity are over,” said U.S. Attorney Barbara McQuade of the Eastern District of Michigan. “We are relentlessly investigating and prosecuting those who seek to profit from false claims for services that are medically unnecessary or, in some instances, not provided at all.”

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